Starting a business almost always takes money. When saving up to make the self-employment switch, financial expert Edward Kohlhepp, CFP from Doylestown, Pennsylvania, recommends that you don’t sell yourself short.

“Don’t stop when you have enough to just buy the business,” he says. “You’ll need money for operating expenses such as taxes, rent and payroll, plus you should have six-to-12 months of personal living expenses saved to tide you over until the business begins generating reliable income.”

Here is a four-step plan to help you start cutting costs and save money so you can get your business up and running as soon as possible.

1. Start Budgeting

Budgeting is an important part of any business, so if you haven’t started a budget yet, this is the time. There are several ways you can do this, from an old-school pen and paper system to using budgeting software that lets you manage your household costs in addition to your business finances, so you can keep tabs on your various sources of income all in one place. (Disclosure: I write for Quicken, who produces these types of products.) You can also use a combination of the two or other methods that work for you, so long as you start a budget and stick with it. Remember: Budgets can be fluid, so feel free to adjust as you go.

2. Focus on the Essentials

As you create a personal budget, keep a record of your daily expenses. If an expense isn’t essential, cut it. For example, it may be part of your morning routine to grab a coffee for the commute. But bringing your own java in a travel mug compared to buying a latte every day will save you serious cash after several work weeks. Review your monthly expenses and eliminate those you don’t really need. Some other considerations:

Will a Netflix or Hulu subscription allow you to cancel your premium cable service?

Do you use your gym membership often enough to justify the cost?

How much can you save by buying staple items in bulk?

Would using public transportation, cabs or services like Uber be cheaper than owning two cars?

If you find that your excess expenses most often happen while you’re on the road, take your budget with you. Budgeting apps can help you track personal and business expenses on the go from wherever you are.

3. Negotiate for Savings

Only half of all consumers bargain over prices when making a purchase. Yet 89% of those who did were able to get a deal at least once in the past year, according to the Consumer Reports National Research Center.

Even if you find a great price online, services like Amazon and eBay often allow you to negotiate on the price with some sellers.
When shopping for items in person, always keep an eye out for a way to get a deal. Negotiating often works best when you can see the person face-to-face. Here are some strategies:

Ask if there is a discount when you pay with cash.

Point out a flaw or defect in an item you want, like a loose button on a jacket, then ask if there could be a discount because of it.

Ask for a discount when buying in bulk.

4. Eliminate High-Interest Debt

Carrying high-interest debt is an extra financial burden you don’t need when you’re ready to start your business. Calculate how much loan interest is costing you each year and compare that to the interest you’re earning on any investments you may have. If the difference is substantial, it may be wise to pay off those debts immediately. High-interest debt can also impact your credit. You can see how by viewing two of your credit scores for free on Credit.com.

When saving for your business, always consider what your needs may be in the future. For example, if you don’t cancel your credit cards after paying them off, you will have available credit to fall back on should your business suffer a setback.

Image: JohnnyGreig

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Ron Weber is a senior marketing manager and content creator for Quicken, Inc., based in Menlo Park, California. He has written hundreds of money management tips, helping readers that are ready to take better control over their personal finances. Ron has spent the majority of his career in finance, having worked as a bank manager, loan officer, and now as a copywriter in the finance-tech space.

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